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International Business - 7 min read
Itching to globalise? It’s a common assumption that only large corporations have the means and scope for globalisation. But more and more SMEs are finding (and seizing) unprecedented opportunities overseas.
Even the smallest companies can globalise successfully when they act strategically and decisively. Before we delve into the “how” of expanding into new markets, let’s take some time to examine the “why.”
All too often, companies expand into overseas markets as a reaction to external forces. Perhaps they’re trying to keep up with competitors or reduce labour costs. Some feel the need to diversify their operations or reduce their risk. If the home market is saturated, the logical answer is to tap a new and fresh market overseas.
These are all valid reasons to globalise, and the strategy may well solve your immediate crises. But as with everything else, you’ll get better long-term results when you act proactively, rather than reactively.
If you’ve been hoping to take action in any of these areas, it might be time for you to broaden your company’s horizons.
Any business, regardless of its size, needs to begin the globalisation process with some big-picture points of reference
Exactly what competitive edge are you trying to gain?
The answer to this question will provide guidance and direction as you think about these three follow-up questions:
1 - What markets should we enter?
2 - What strategy should we use?
3 - What type of structure will set us up for success?
The answers to these questions will provide you with a framework for your company’s globalisation strategy.
As you discuss possible strategies and timelines for your entry into new markets, consider your company’s resources and capacity. Additionally, you’ll need to keep the following considerations in mind.
If your company can’t offer something new and different, you will have trouble sustaining a competitive advantage in your new market. To set yourself apart from the pack, you’ll need to be distinct, whether it’s in your marketing methods, your innovative products or your lower prices.
Researchers Melita Balas Rant and Simone Korenjak Černe found that “differentiation via innovation positively impacts firm performance when there are many market unknowns over key success factors, whereas marketing differentiation positively impacts firm performance when there are few market unknowns over key success factors.” Companies can differentiate via expert marketing, but success is more reliable when businesses use innovation to set themselves apart.
Keep in mind that you can differentiate in any number of ways. Consider your strengths. Also, research potential markets carefully to discover empty niches you might fill.
A fruitful market entry can launch your short-term success in a new area, but you need a long-term plan as well. In many cases, consolidation is the logical next step. There are many ways to tackle entry and later consolidation, so review your options and choose wisely, and lay out your entire plan before you take your first steps.
When it comes to globalising, one size does not fit all. Each nation is a world unto itself, and you’ll need to abandon generic plans with template-like solutions. The way you manufacture products in Australia is very different from the way you do it in China. Regulations, taxation, hiring: all of these attributes need to be considered afresh with each expansion.
Moving to a new country leads to culture shock: food, language, religion, social norms. Not only do individuals experience these kinds of surprises, but companies face acclimation and adaptation as well.
Administering a business in a different country may require immense flexibility, humility and tenacity. You’ll have to get used to new paradigms regarding consumption, distribution and consumption. Fortunately, these experiences will help you to understand your business better and discover new ways of operating. All of this experience leads to greater wisdom and know-how.
Globalisation offers excellent opportunities, but it also requires significant risk. Lower your risk by working with business advisors who have successfully helped many companies expand into new regions. To set up a consultation with one of our Altus advisors, reach out to us.
We look forward to helping you reach your globalisation goals.
Set your business on the right path with this simple guide.
Make sure you’re on the right track with this online checklist.
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